The near collapse of the real estate market has stymied many developers, but it hasn’t discouraged California P.E.O. Home.
The Alhambra-based company is forging ahead with an ambitious plan to build a luxurious $126 million housing complex – replete with a spa, fitness center, fine-dining restaurant and other amenities.
Thought that kind of project had gone out of style during the new austerity? Not when the residents are retirees.
The non-profit builds senior communities, one of the few corners of the local and national housing market not moribund. In fact, as the first wave of baby boomers hits retirement age amid an insufficient supply of elderly housing, the market is on the cusp of what many believe will be a rapid expansion.
“The senior population is absolutely increasing,” said Kristis Ferris, senior executive of business development for California P.E.O. Home. “Just in Alhambra, there’s over 5,000 seniors who meet our qualifications and there’s not enough housing to support the boom coming up, nor to support what’s there now.”
Indeed, the company’s project, called Redstone, will involve tearing down 113 existing units and replacing them with 183.
But it’s not just non-profits that are responding to the rising demand for senior housing. For-profit developers such as Silverado Senior Living Inc., Senior Resource Group and Belmont Village LP have each recently opened assisted-living facilities in Los Angeles County.
According to the U.S. Census Bureau, the number of people at least 65 years old in the United States is expected to rise by one-third over the next decade to more than 54 million. Los Angeles, in particular, is considered a promising market because of its warm climate, large population and abundance of wealth. That all translates into a significant number of seniors looking for housing – some of whom are willing to shell out for pricey accommodations.
Exact figures are hard to come by, but there are easily more than a dozen senior housing projects that have recently opened, are under construction or are in the final stages of planning in the county. In addition, the nation’s largest real estate investment trust, HCP Inc., is headquartered in Long Beach and has made big bets on assisted-living, nursing homes and other facilities for the elderly.
It’s a developer’s dream with one exception: financing – a problem that cuts both ways.
The lingering effects of the financial crisis means developers have struggled to obtain capital, while the soft housing market has made it harder for the elderly to sell their homes. That’s key to scraping together money for one-time entrance fees that can exceed $200,000 for the fanciest assisted-living facilities.
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